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Can Foreign Aid Buy Growth?

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  • William Easterly

Abstract

The widely publicized finding that "aid promotes growth in a good policy environment" is not robust to the inclusion of new data or alternative definitions of "aid," "policy" or "growth." The idea that "aid buys growth" is on shaky ground theoretically and empirically. It doesn't help that aid agencies face poor incentives to deliver results and underinvest in enforcing aid conditions and performing scientific evaluations. Aid should set more modest goals, like helping some of the people some of the time, rather than trying to be the catalyst for society-wide transformation.

Suggested Citation

  • William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
  • Handle: RePEc:aea:jecper:v:17:y:2003:i:3:p:23-48
    Note: DOI: 10.1257/089533003769204344
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/089533003769204344
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    References listed on IDEAS

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